Break Up The Banks?

by anne on March 29, 2009

old-bankIn the middle of what many consider world around financial chaos there is talk in the U.S. of breaking up the banks.  It’s a tempting thought, particularly for someone like me.

I’m old enough to remember when banks were local. The president of the bank knew your name and if he (yeah, it was always a man back then) didn’t know your account it was easy for him to get his secretary to get him the info he wanted.

In fact, I remember when a banking Vice President tried to explain to my father, who was in the real estate business, that he had to sell some property to get current on some other mortgages. My mom had become horribly sick and my father was, to put it simply, rather out of it. The V.P. realizing my father wasn’t tracking well, turned to me to make sure I understood what was needed. 

I also remember one kind teller taking close to an hour trying to help me balance my checkbook. 

You can’t get that kind of service from a mega-bank. I don’t know if breaking the mega-banks that are in mega-trouble and still not lending much would help. My gut says it probably wouldn’t make things worse, and it might make things better.

therawstory has an article about Keith Olbermann urging such a breakup. The story of how this worked for some Asian countries is interesting.

I suspect if we still had strong anti-trust legislation we wouldn’t have mega-banks the way we do today. But anti-trust has fallen to the conservatives. Of course, they would have you believe only liberals want anti-trust protection and never point out that the so-called Sherman Anti-Trust Act was put in place in 1890. It was named after its author, Senator John Sherman, an Ohio Republican,then chair of the Senate Finance Committee.

It say, in part: “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony.”

Some would argue that three auto companies, and a handful of large banks proves there is no monopoly in either industry. When I think or try to think about the current financial meltdown which is apparently because of greed and connivance that isn’t actionable, I wonder.

I somehow doubt if Chuck, the bank V.P. who warned me and my father about our financial situation, would have found derivatives based on risky loans a great investment, and if he had, JJ, the bank founder and president would have set him straight. That’s the sort of unofficial but truly workable check and balance that worked when banks were small. It’s something to think about isn’t it?

What do you think; should the banks be broken up?

Love, blessings and prosperity,




Image from

Be Sociable, Share!


Ed March 30, 2009 at 11:22 am

The problems were are now experiencing with banking cannot be traced to just larger banks. Smaller banks also got caught up in the bundling of loans, as witnessed by the growing list of small local and regional banks taken over by the FDIC. Small banks saw local loans as another revenue source, bundling them and selling them to larger banks which sold them to Wall Street which sold them to foreign companies. When you lenders and loan recipients become that distant, it can be no wonder such problems occur.

The solution is to keep local loans local and don’t allow the financial system to engage in actions that require Physics Doctorates to manage.

anne March 30, 2009 at 1:58 pm

Ed, where is that list of banks? I’d like to watch it for awhile… and yes, local loans should be local… sigh… I actually want to move my money from a mega bank to something local… having trouble figuring it out. Plus I can walk to the mega bank.


Comments on this entry are closed.